A Start Up Loan is a personal, government-backed loan of £500 to £25,000 for people starting or growing a UK business that has been trading for less than 60 months. From 6 April 2026, the fixed interest rate is 7.5% per annum, up from the previous 6% rate that held for over a decade. There is no security required, no personal guarantee, and no equity stake taken. Every successful applicant receives 12 months of free business mentoring. Loans are provided through the Start Up Loans Company, a wholly owned subsidiary of British Business Bank plc, funded by the UK government. Source: startuploans.co.uk. |
KEY FACTS | |
Loan amount | Interest rate (from 6 Apr 2026) |
Repayment term | Security required |
Trading eligibility | Mentoring |
Application fee | Early repayment charge |
Total loans issued | Total value deployed |
What Is a Start Up Loan?
A Start Up Loan is a government-backed personal loan designed for people starting or growing a business in the UK. It is not a conventional business loan - it is issued in the applicant's personal name, is unsecured, and does not require any equity stake or personal guarantee in the traditional sense.
The loan is administered by the Start Up Loans Company, established in 2012 and a wholly owned subsidiary of British Business Bank plc. The British Business Bank is a development bank owned by HM Government. Neither entity is authorised or regulated by the FCA or PRA in their capacity as lenders under this scheme.
Since the scheme launched in 2012, over 100,000 loans totalling more than £1 billion have been issued to UK entrepreneurs. Each recipient also receives 12 months of free business mentoring and support with their business plan and cash flow forecast during the application process.
April 2026 Changes: Rate and Eligibility
Two significant changes came into effect on 6 April 2026:
- Interest rate increased from 6% to 7.5%. The 6% rate had been fixed since the scheme launched in 2012. Following a review of economic and market conditions, the rate was raised to 7.5% for all new applications from 6 April 2026 onwards. Applications where the credit check was passed before 6 April 2026 retain the 6% rate, provided the application completes within 90 days of that credit check. Existing borrowers with a loan already issued at 6% are unaffected.
- Trading window extended from 36 months to 60 months. Previously, businesses could only apply for a first Start Up Loan if they had been trading for up to 36 months. From 6 April 2026, businesses trading for up to 60 months (five years) are eligible. Pre-start businesses with no trading history remain eligible.
What the 7.5% Rate Means in Practice
The rate is fixed for the full term of the loan, which means monthly repayments are predictable throughout. On a £10,000 loan over 3 years at 7.5%, monthly repayments are approximately £311, with total interest payable of around £1,196. On a £25,000 loan over 5 years, monthly repayments are approximately £501, with total interest of around £5,060.
Use the affordability calculator at startuploans.co.uk to model specific amounts and terms before applying.
Eligibility: Who Can Apply
All of the following must apply:
- You are aged 18 or over
- You have the right to work in the UK
- Your business is based in the UK
- Your business has been trading for less than 60 months (five years), or you are pre-start with no trading history
- Your business is not currently in a creditors voluntary arrangement, administration, receivership, or other insolvency process
- You have not been subject to a disqualification order as a company director
The loan is personal, not a business loan. This means it appears on your personal credit file, not your company's credit file. The Start Up Loans Company carries out a personal credit check as part of the assessment.
What the Loan Cannot Be Used For
The loan must be used for a legitimate business purpose. Certain uses are excluded. The scheme does not support businesses involved in:
- Activities that are illegal in the UK
- Businesses that derive the majority of income from investment activities (not trading)
- Businesses that are already in financial difficulty or insolvency
The funds cannot be used for personal expenditure.
The Free Mentoring
Every successful first-time applicant receives 12 months of free business mentoring, matched with a mentor relevant to their sector and stage. This is provided through the Start Up Loans delivery network at no cost to the borrower. Support with writing a business plan and cash flow forecast is also provided during the application process - not after - which means the application itself is supported, not just the post-loan period.
Second Start Up Loans
Businesses that have already received a Start Up Loan can apply for a second loan if they need additional finance to grow. The maximum total balance outstanding across all Start Up Loans cannot exceed £25,000 at any time. For example, if a first loan of £15,000 has been partially repaid and the outstanding balance is £10,000, a second loan of up to £15,000 may be available, subject to affordability and eligibility criteria.
How to Apply
Applications go through the Start Up Loans Company directly at startuploans.co.uk, or through one of its approved delivery partners. The process involves:
- Submit an initial application online
- Be assigned a dedicated business adviser who helps complete the full application
- Provide a business plan and cash flow forecast (support is provided)
- Pass a personal credit check
- If approved, receive the funds and be matched with a mentor
Decisions typically take a few weeks if the application is well prepared. Applications declined must wait at least six months before reapplying.
Start Up Loan vs Growth Guarantee Scheme
The two schemes serve different business stages and have different structures. Start Up Loans are personal unsecured loans for early-stage businesses, issued directly. The Growth Guarantee Scheme provides a government-backed guarantee to commercial lenders on facilities up to £2 million for established businesses. For businesses in their first five years needing under £25,000, Start Up Loans is generally simpler and the 7.5% fixed rate is competitive. For businesses needing larger amounts or with established trading history, GGS via an accredited lender is the appropriate route.
Related Guides
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. The Start Up Loan scheme terms are set by the Start Up Loans Company and British Business Bank and are subject to change. Always check current terms at startuploans.co.uk before applying. Kaeltripton.com is not affiliated with the Start Up Loans Company or British Business Bank. ICO registration ZC135439.
What is the interest rate on a Start Up Loan in 2026?
From 6 April 2026, the fixed interest rate on a Start Up Loan is 7.5% per annum. This applies to all new applications from that date. The rate was previously 6% and had remained at that level since the scheme launched in 2012. Applications where the credit check was passed before 6 April 2026 retain the 6% rate if the application completes within 90 days.
How much can I borrow with a Start Up Loan?
Between £500 and £25,000 per person. The maximum total balance across all Start Up Loans (including any second loan) cannot exceed £25,000 at any one time. Repayment terms range from 1 to 5 years.
Do I need security or a personal guarantee for a Start Up Loan?
No security is required and no equity stake is taken. The loan is a personal unsecured loan. It appears on your personal credit file, not your company's. A personal credit check is carried out as part of the application assessment.
Can I apply if my business has been trading for more than 3 years?
Yes, from 6 April 2026. The trading eligibility window was extended from 36 months to 60 months (five years). Businesses that have been trading for up to five years, or pre-start businesses with no trading history, are eligible to apply for a first Start Up Loan.
What is the free mentoring included with a Start Up Loan?
Every successful first-time applicant receives 12 months of free business mentoring, matched with a relevant mentor. Support with writing a business plan and cash flow forecast is also provided during the application process at no cost.
Can I get a second Start Up Loan?
Yes. Businesses that have already received a Start Up Loan can apply for a second loan. The maximum total outstanding balance across all Start Up Loans cannot exceed £25,000 at any time. The second loan is subject to affordability and eligibility criteria and must be applied for through an accredited delivery partner.
Sources: Start Up Loans Company (startuploans.co.uk), including Changes to Interest Rate and Eligibility, 6 April 2026; British Business Bank (british-business-bank.co.uk), Start Up Loan guidance; Small Business, Enterprise and Employment Act 2015.
